Sunday, 5 June 2011

Test your economic literacy

or lack thereof!!! You can take the 13-question economic literacy test from the Minneapolis Federal Reserve.

I got 13/13, so it must be easy, but a lot of people don't seem to be that literate. The Minneapolis Fed reports that back in 1998 when it set out to answer the question: How Economically Literate are People? it found that the answer was not very.
To try to answer the above question, the Federal Reserve Bank of Minneapolis commissioned a national telephone poll that was conducted in September and October 1998 by the Minnesota Center for Survey Research at the University of Minnesota. Four hundred and four randomly selected adults from throughout the United States were asked 13 questions designed to test their understanding of economic literacy. The average score was 45 percent, which reveals some understanding, also suggests a need for improvement. (The entire survey, which has a sampling error of plus or minus 5 percentage points, follows this article.)

The Minneapolis Fed's 13 questions were based on the six key concepts of economic literacy described in this article. For example, as discussed earlier, the basis for much of economic reasoning is that people and societies face trade-offs. Yet only 28 percent and 19 percent of those surveyed, respectively, answered correctly the questions that deal with this concept (questions 2 and 3). Respondents did only somewhat better when asked about the role of government in the economy (questions 10, 12 and 13). Only 38 percent got the right answer to the question dealing with incremental thinking (question 9).

Questions 5 through 8 of the survey ask how markets coordinate consumption and production, and 46 percent on average answered correctly. Respondents got a 60 percent score when asked about trade promoting growth (questions 1 and 4). Ninety percent, however, got the right answer to the question about relative prices guiding decision-making (question 11). (emphasis added)
Can you do better than 45%?

(HT: Carpe Diem)


Andrew R said...

Of course the "right" answers depend on accepting the dubious assumptions behind neo-classical economic theory. Easy to get the answers "right" if you know this.

John Macilree said...

13 out of 13 here too.

Sufficiently challenging to be interesting and a little disturbing to see the general state of economic literacy.